Eni turns on the tap at Bahr Essalam Phase 2

10 July 2018, Week 27, Issue 745

Italy’s Eni continues its success in the Mediterranean Sea with the start of production last week at the Bahr Essalam Phase 2 project offshore Libya. The company announced on July 5 that the first of 10 wells had started producing for Mellitah Oil & Gas, a 50:50 joint venture between Eni and Libya’s National Oil Corp. (NOC), just three years after a final investment decision (FID) for Phase 2 had been taken. Two more wells are to start up within the next week and seven more by the end of October.

Bahr Essalam is Libya’s main offshore gas asset. Phase 1, which started production in 2005 and currently produces 17 mcm per day. Gas goes to Libya’s domestic use and also for export to Italy, through the Eni-operated Green Stream subsea gas pipeline, which is 540 km in length. Gas exported to Italy via Green Stream amounts to around 5.5 bcm per year. 

When Phase 2 development is finished, Bahr Essalam will produce 31 mcm per day, or around 11.3 bcm per year. The extra gas will prove useful as Libya attempts to rehabilitate its electricity system, which has experienced serious damage since the 2011 revolution.

The gas field is located 120 km northwest of Tripoli and holds an estimated 260 bcm of gas as well as condensate, which is produced at a rate of 30,000 bpd. Output is treated at the Sabratha platform for separation and dehydration and then transported to Mellitah for further treatment through a 36-inch (914-mm) diameter pipeline. 

The Mellitah facility is equipped to process oil and gas from Bahr Essalam and the onshore Wafa field with three trains allocated for gas and two for oil. 

The chairman of the United Nations-backed Presidency Council and the prime minister of the Government of National Accord (GNA), Fayez Al-Serraj, and NOC’s head, Mustafa Sanalla, attended the inauguration ceremony.

The new production would “definitely add true value to the national economy,” Serraj said. “In the past, we missed huge investment opportunities owing to the lack of a budget. However, today we are committed more than at any time to encourage investment in the oil sector, and to grant promising opportunities to global giants on a commercial basis that serves the interest of this partnership and creates growth that gives new hope to Libyan youth.”

Eni’s CEO, Claudio Descalzi, said the Bahr Essalam project “further demonstrates the trust and recognition Eni has in NOC as Libya’s sole legitimate oil corporation, one with whom we will continue to work exclusively in country.”

Descalzi’s comments concern the recent re-emergence of a rival NOC based in Benghazi, which has the backing of the House of Representatives (HoR) government based in Tobruk. It has also recently received the support of General Khalifa Hifter, whose Libyan National Army (LNA) last month retook control of the main oil export terminals in Libya’s oil crescent and handed them over to the Benghazi NOC.

Hifter had supported the Tripoli NOC until a military group, led by the renegade Ibrahim Jathran, attacked the terminals in June and did serious damage to storage facilities during several days of fighting. Hifter said earnings from oil exports that were going to the NOC in Tripoli were ending up with militant groups that are fighting the LNA.

A statement from the eastern NOC said it was not motivated by regional considerations but was acting for Libya as a whole. It went on to say the previous arrangement led to the squandering of the country’s wealth, going on to call on the United Nations and other international parties to “reach rational and practical solutions” to allow oil to continue flowing. 

Hifter has since ordered a halt to exports from the eastern oil terminals and set conditions before exports can resume. One of those demands is the removal of the head of the Central Bank of Libya (CBL), Al-Siddiq Al-Kabeer. There is a parallel CBL based in Benghazi. 

Tripoli NOC has declared force majeure on exports from its eastern terminals. Total production losses were put at 850,000 bpd by the company.

 

Edited by

Ed Reed

Editor

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